This swing trading strategy is a very reliable and solid trading strategy that can pull in a lot of pips quite easily.
What you need is a 34ema, which is primarily used only for determining trend direction of the forex market and an ability to draw a good trendlines.
Trades are taken after the break on the trendline when price makes a rally or pullback and once this rally or pullback fails, trades are entered.
Indicator: 34eam (you can also use other emas like 7,14,25,50emas or which ever emas you’d prefer)
Timeframes:1hr & upwwards
Buy Rules:
(1) watch for a downward trendline break
(2)price must then be above the 34ema
(3)after the downward trendline breakout, watch the highs of the candlesticks that form.
(4)The signal candlestick is the candlestick with a high that is lower than the previous candlestick’s high, if that single candlestick’s high is broken, then buy immediately at Market, or you can place a sell stop order just a few pips above the high of that signal candlestick so if the price breaks its high, your order will be executed.
(5) if your buy stop order is not excuted and the candlesticks continue to make lower highs, move your buy stop order to each lower high candlestick that forms until price moves up and activates your order.
(6) Place your stop loss just below the low of the candlestick that activates your order.
Sell Rules
Just the exact opposite of Buy Rules:
(1) watch for a upward trendline breakout
(2)price must then be below the 34ema
(3)after the downward trendline breakout, watch the lows of the candlesticks that form.
(4)The signal candlestick is the candlestick with a low that is higher than the previous candlestick’s low, if that single candlestick’s low is broken, then sell immediately at Market, or you can place a buy stop order just a few pips below the low of that signal candlestick so if the price breaks its low, your order will be executed.
(5) if your sell stop order is not excuted and the candlesticks continue to make higher lows, continue to move your sell stop order to each higher low candlestick that forms until price moves down and activates your sell stop order order.
(6) Place your stop loss just above the high of the candlestick that activates your order.
Where To Place Your Profit Targets:
Here are a couple of options for placing profit targets:
(1) Take profit at the level when profit is 3 times what you risked initially.
(2) If trading from a daily chart, place profit target 80-250 pips
(3) If trading from the 4hr chart, aim for 40-120 pips profit targets.
(4) You can also use previous swing high points (peaks) as profit target levels for buy orders and previous swing low points(troughs) as profit target levels for sell orders.
How To Manage Your Trades When You Are In Profit
Don’t be greedy. When the trade goes favourably and you are in profit, learn to lock in your profits by moving your stop loss.
- If trading off from the daily chart, you can move your stop loss and place a few pips behind each daily candlestick’s low if its a buy trade or if its a sell trade, place stop loss behind the high.
- The same can be done if you are trading off from the 4hr timeframe.
- One of the best ways of managing a trade is to trail stop your trades just behind or above each succesive price swings as your trade continues to move in your desired direction. These price swing points are essentially support and resistence levels and place your trailing stop above or below such levels ensures that you do not get stopped out prematurely and with this practice you can ride out the trend for a very long time, if the trend is strong.
Advantages of The 34Ema with Trendline Break Swing Trading System
- allows you to trade with the trend
- use of price action and trendlines to enter your trades
- when price breaks a trendline, it often a good signal that that trend is now changing and added onto that the 34ema gives you the direction of the market too, so when you enter a trade with this system, it allows you to almost get into a trade at the start of a new trend.
Disadvantages of the 34Ema with Trendline Break Swing Trading System
- there will be times when you will see there wont be enough swing points (peaks & troughs) to draw your trendlines from and these often happen when the market makes a massive move without slowing down form those peaks and troughs.
- tendency to get false signals in a ranging or sideways market
Additional Trade Entry Techniques
The use of bullish and reversal candlesticks can be used as your “signal” candlestick to buy or sell.
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